Final ACA Implementation Regulations Issued by Trio of Enforcement Agencies

Author: Rena Pirsos, XpertHR Legal Editor

November 20, 2015

The Departments of Labor, Health and Human Services and Treasury have jointly published comprehensive final rules under the Affordable Care Act (ACA), which essentially combine and solidify interim rules, several pieces of guidance and Questions and Answers issued since 2010, when the ACA was first enacted. The final rules, which will replace the interim rules effective January 1, 2017, pertain to grandfathered plan status, pre-existing condition exclusions, lifetime and annual limits, rescissions, dependent coverage, appeals and patient protections. The following are highlights of the final rules that are of interest to employers.

Grandfathered Plans

When the ACA was enacted in March 2010, employers were permitted to maintain existing health plans that were then in effect under a special grandfather provision. To allow some room for plan changes, the interim rules defined the extent to which a grandfathered plan could change without triggering a loss of that status. Specifically, the interim rules provide that the determination of grandfathered status is made separately for each benefit package (e.g., PPO, POS and HMO options) available under a group health plan, rather than for the plan as a whole, so that the grandfathered status of the entire plan is not lost when plan changes are made forfeiting that status as to a single package.

The final rules retain this provision and clarify that plan sponsors and insurers are required to include a disclosure in plan benefit summaries stating that their plan or coverage is grandfathered, along with their contact information. The final rule includes a model disclosure that plan sponsors and insurers may choose to use.

The interim rules currently include an anti-abuse provision under which the grandfathered status of a plan may be lost if a new employer or employees are transferred into a plan solely to take advantage of the plan's grandfathered status, unless there is a bona-fide reason for the transfer. The final rules include examples of such bona-fide justifications, and clarify that new contributing employers or employee groups are exempt from the anti-abuse provision and can be added to a multiemployer plan without loss of grandfathered status.

The current, interim rules allow for loss of grandfathered status due to excessive increases in copayments. The final rules clarify that excessive increases in copayments for any category of services covered by a plan will result in the loss of the plan's grandfathered status, even if copayments for other services do not increase excessively.

The final rules also answer questions that have been raised regarding the application of the rule that coverage can lose grandfathered status if an employer's or employee organization's contribution rates toward the cost of coverage are reduced by more than five percentage points from the rate in effect in March 2010 for any tier of coverage for similarly situated employees.

Pre-existing Conditions

The final rules clarify that the ACA's prohibition against the imposition on plan enrollees of pre-existing condition exclusions, unless the plan is a grandfathered individual plan, does not prevent a plan or insurer from excluding all benefits for a condition, if it does so regardless of when the condition arose. This is so even if other ACA provisions (e.g., the essential health benefits requirements) preclude this type of exclusion.


The final rules also clarify rules for integrating health reimbursement arrangements with group health plans that otherwise comply with ACA requirements, affirm that such plans cannot be used to purchase individual plan premiums and provide rules as to when they can be used to pay Medicare premiums.

Adult Children

Also clarified is that insurers and plans must provide coverage for adult children under age 26, regardless of their marital status or whether they are students or financially dependent on or live with enrolled parents. In addition, adult children must be covered, even if they live outside of the service area of the plan (i.e., they are away from home to attend school or to pursue an employment opportunity).